Restraining Government in America and Around the World

Walter Williams vs. Barack Obama on Class Warfare

It isn’t fair to compare and contrast the views of a distinguished economist with the envious ramblings of a career politician/community activist. But it’s also not right for the government to use coercion to impose bad policy, so I don’t feel guilty about sharing this excerpt from a recent Walter Williams column.

President Barack Obama, in stoking up class warfare, said, “I do think at a certain point you’ve made enough money.” This is lunacy. Andrew Carnegie’s steel empire produced the raw materials that built the physical infrastructure of the United States. Bill Gates co-founded Microsoft and produced software products that aided the computer revolution. But Carnegie had amassed quite a fortune long before he built Carnegie Steel Co., and Gates had quite a fortune by 1990. Had they the mind of our president, we would have lost much of their contributions, because they had already “made enough money.” Class warfare thrives on ignorance about the sources of income. Listening to some of the talk about income differences, one would think that there’s a pile of money meant to be shared equally among Americans. Rich people got to the pile first and greedily took an unfair share. Justice requires that they “give back.” Or, some people talk about unequal income distribution as if there were a dealer of dollars. The reason some people have millions or billions of dollars while others have very few is the dollar dealer is a racist, sexist, a multinationalist or just plain mean. Economic justice requires a re-dealing of the dollars, income redistribution or spreading the wealth, where the ill-gotten gains of the few are returned to their rightful owners. In a free society, for the most part, people with high incomes have demonstrated extraordinary ability to produce valuable services for — and therefore please — their fellow man. People voluntarily took money out of their pockets to purchase the products of Gates, Pfizer or IBM. High incomes reflect the democracy of the marketplace. The reason Gates is very wealthy is millions upon millions of people voluntarily reached into their pockets and handed over $300 or $400 for a Microsoft product. Those who think he has too much money are really registering disagreement with decisions made by millions of their fellow men. In a free society, in a significant way income inequality reflects differences in productive capacity, namely one’s ability to please his fellow man.

The only point worth adding is that not all wealth is legitimate. Those who profit from crony capitalism and/or insider connections have accumulated money through coercion, not through their ability to serve the needs of others.

That’s why I explained, in this interview, that it is important for defenders of capitalism to draw a bright-line distinction between earning honest wealth through free markets and obtaining dishonest loot via statism.

13 Responses

This is a great point Mr. Mitchell. I try to make points like this all the time in my own writing so I really like to read other peoples work such as this which breaks it down so that anyone who listens will understand. Keep up the good work.

So in Presbo’s world, there ARE no Microsofts, no GEs, no GMs, no Googles. Sounds like a cold, joyless place.

Be nice if our hypocrit-in-chief could turn some of his enmity ‘gainst the profiteering congressmen who line their liives with laws that favor themselves, then line their pockets with self-impsed golden parachutes.

Marginal happiness per extra income earned already declines significantly with income as it is. The left is right. Extra money already brings little extra happiness as it is, even before the class-warfare. That is why it is difficult to keep highly productive people employed doing all they can do. Many-many very competent people — whom you’ve never heard of because they never attain great fame — either drop out, throttle down, pass on a second family income etc. once they have well… “earned enough” per Obama’s definition.

So, add to an already declining marginal happiness class-warfare taxation, class-warfare envy restrictions on what you can buy with the money you are finally allowed to keep etc. and even more people either drop out or gravitate more towards mediocrity. That is why you never hear about them. They are somewhere in the Caribbean sailing with their newly acquired tanned middle aged French friends. The next Vemurafenib drug? The next robotic microsurgery machine? The next Aromasin? The next cheap source of energy? The next… who knows what which we cannot even imagine today? … well, you who believe in HopNChange figure it out…

At the other end of the spectrum, class warfare pacifies into complacency those who have, well… “not earned enough”. “Don’t worry, someone else, someone more productive, someone smarter will either be convinced, tricked by macroeconomic gimmicks, or ultimately coerced by class warfare to work for you. So that you may bridge the gap between your low productivity and the average standard of living you voted for”.

But why is raw production so essential? After all Paul Krugman can post-process raw productivity through microeconomic gimmicks and have three loaves and two fishes maintain the American 6x worldwide standard of living. Not? You mean there’s no perpetual motion machine of prosperity? I won’t believe it until I have voted for HopNChange seven times and I still see no improvement. There will still be time to reverse course then right?

The world renowned acumen of the average American under French incentives to produce. Now who in the world will be able to compete with THAT new indomitable combination? Six times world average prosperity for Americans seems all but guaranteed!

The dream continues. The aberrantly individualistic American is converging towards the worldwide norm. Inevitably so does his prosperity… Lights out America. It’s already too late. The distance to the iceberg is smaller than your turning radius.

Interesting arguments for wealth accumulation from productive labor. However, there seems to be a conflation of a ‘person’ with an organized group of workers. Certainly Bill Gates was and continues to be ‘productive’ but the money made does not come from Bill Gates directly. Bill Gates is just one person. How ‘productive’ can any one person be? Ideas and capital are great but it takes ‘hands’ to produce. There seems to be some imbalance in the reward of the actual production.

@Luis – If your prescription to “right” that “imbalance,” however measured, is coercion to redistribute wealth, or to restrict freedoms, to earn, to manage a business, within the law & common decency, then you’re on the road to serfdom & you will ultimately doom us all to diminishing returns and decline.

There will always be “imbalances.” But they have a way of working out, such as those which Dr. Williams’ column cites. Edison got fame and fortune beyond his wildest imagination, same with Gates and Carnegie. We the people get cheap, healthy light where before, once the sun set, darkness reigned. We get steel that framed, continues to frame, our bridges and homes, & computers & telephones you can carry with you, hold in your hand and read your newspaper on, or call your family in rural China on.

When you consider them, a Bill Gates or a Thomas Edison only get so much “happiness” or relief from their millions & billions. We as a society get _untold_ riches from all these inventions in return for their innovation. That’s a fair trade any way you slice it.

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